Oil prices fall to $75 a barrel as threat from Hurricane Nicholas melts

oil prices go up facing election day

Oil prices slipped on Thursday to about $75 per barrel from a multi-week high a day before. As the threat from Hurricane Nicholas melts, oil prices lose their push.

As we reported previously, Hurricane Nicholas landed as a category one hurricane on Monday night. However, it did not have the destructive power as its predecessor, Ida. Most of the U.S. Gulf Coast oil production remained untouched.

Power outages and heavy rain did halt briefly Colonial Pipeline’s operations. Other assets also stopped production but came back online rapidly. This allowed the energy sector in Texas and Louisiana to keep focusing on repairs and recoveries from Ida.

As a result, Brent crude was down 39 cents, 0,5%, and settled at $75,07 per barrel. A day before, on Wednesday, Brent reached $76,13 a barrel, its highest since July 30, according to Reuters. Moreover, Brent has rallied around 45% this year, supported by production cuts by OPEC plus recovery from the pandemic’s hit to demand.

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Oil prices losing push, but factors still playing in favor

In contrast, the U.S. mix, the West Texas Intermediate, slipped 19 cents, 0,3%, and settled to $72,42 per barrel. About oil prices’ performance, Rystad Energy analyst Nishant Bhushan said. “As Nicholas spared U.S. production from further disruptions, it is difficult to see how oil prices can increase further in the near term.”

In addition, Jeffrey Halley, analyst at brokerage OANDA, also said about this matter. “The price surge and impact on oil is a situation that I believe will get much worse before it gets better.”

On the other hand, factors playing in favor of oil prices are the surging prices of power in Europe. They have boosted after low gas inventories and lower than normal gas supply from Russia, Reuters reports. In fact, benchmark European gas prices at the Dutch TTF hub have risen by more than 250% since January.

Finally, yet another sign of recovery would be the oil reports this week. They forecast global oil use would rise above 100 million barrels per day, a level last reached in 2019, as soon as next year’s second quarter.

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